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The favourable inflationary environment also lowers the expectations that
the Central Bank may increase interest rates to meet its inflation target.
Since February the steady increase in the benchmark DTF rate had
raised concerns that the Central Bank would raise interest rates and stave
off the nascent recovery, in order to keep inflationary expectations in
line with this year's inflation target.
According to this month's survey interest rates are likely to rise
only modestly for the remainder of the year.
Strong export performance generates growth in trade
surplus.
According to DANE's trade data, annualised exports grew 16.4% in May
compared to the same month last year.
Traditional exports accounted for 54.4% of the total exports.
Favourable international oil price levels have driven the strong
export performance, with oil exports accounting for 35.3% of total exports
and showing the strongest growth at 74.7%.
Coal exports provided 9.3% to the value of exports and expanded at
a healthy 23.1%. Among
non-traditional exports, industry also performed favourably, particularly
the chemical products sector, which accounted for a 10.2% share of total
exports and grew by 12.8%.
Annualised imports remained down 10.4% year-over-year in May.
Of total imports, intermediate goods are profiting most from the
incipient recovery. Annualised
imports of intermediate goods rose 1.9% year-over-year.
However both capital and consumer goods imports remained well below
the levels seen for the same month in 1999, contracting 19.2% and 13.2%
respectively.
As a result of strong export performance and lagging import demand, the
annual trade surplus reached US$ 1.5 billion in May. Imports are expected to pick up by year-end but will remain
constrained by the slow recovery in domestic demand, while exports are
likely to continue to benefit from a more competitive exchange rate and a
favourable international environment.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Colombia. For more details please click here.
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